The UK statutory derivative action : an opportunity to bring justice to minority shareholders

PhD ThesisIn recent years, the law on derivative actions has caused much academic and judicial debate as to what role the UK Parliament sees the new statutory derivative action under the Companies Act 2006 is (or should be) performing. While the purpose of introducing the new statutory derivative action was to make it easier for minority shareholders to bring a derivative claim, the evidence so far suggest that this is not the case. Indeed, although various new cases have considered in varying depths the new statutory derivative procedure, they are still uncertainties as to the application and interpretation of the statutory derivative procedure. It is therefore the intention of the thesis to clarify the actual role and purpose of the statutory derivative action and examine whether it achieves the objectives at which it aims. The thesis, targeting a gap in the literature, approaches the issue of derivative actions from a different angle. Specifically, the aim of the thesis is to investigate whether the new statutory derivative action provides ‘commercial justice’ to minority shareholders. The thesis argues that, due to Parliament’s failure to clarify the actual role and purpose of derivative actions as well as to provide clear guidelines for the courts to follow when determining whether to continue with a derivative claim, it is essential for the courts to embrace a more flexible concept which would be capable of adapting to the changes in the society which the courts aim to serve. The thesis argues that ‘commercial justice’ is such a concept. However, as no such concept has been used in the context of derivative actions, the purpose of the thesis is to embark upon an enquiry to develop a theoretical framework for ‘commercial justice’ in chapter two, as this will help the thesis to answer one of the most important research questions: Does the new statutory derivative action achieve ‘commercial justice’ to minority shareholders